USD/CAD – Loonie Swoon Hits 5-Year Lows

The Canadian dollar continues to lose ground on Tuesday, as the pair trades just above the 1.14 line in the North American session. The Canadian dollar has now lost about 250 points in the past week, as the currency finds itself at its lowest level since July 2009. BoC Governor Stephen Poloz testifies before the House of Commons Standing Committee on Finance in Ottawa. In the US, the trade deficit widened to $43.0 billion, its highest in four months.

Canadian Trade Balance was stronger than expected, but this didn’t help the struggling Canadian dollar. The key indicator posted a surplus of CAD $0.7 billion, bouncing back from a deficit of CAD $0.6 billion last month. The markets had expected a deficit of CAD $0.7 billion.

US releases started off the week on a positive note as ISM Manufacturing PMI improved to 59.0 points, a strong improvement from the previous release of 56.6 points. On Friday, UoM Consumer Sentiment continued its upward trend, improving to 86.9 points. This beat the estimate of 86.4 points. Meanwhile, Canadian GDP posted a decline of 0.1%, pointing to weak economic growth. It was the indicator’s first decline since January.

It was another solid performance from US GDP on Thursday, which posted a strong gain of 3.5% in Q3, ahead of the estimate of 3.1%. Although this was short of the Q2 reading of 4.0%, the two readings mark the strongest six-month gain we’ve seen in ten years. Unemployment Claims increased slightly to 287 thousand, slightly higher than the previous reading of 284 thousand. However, the four-week average remains at multi-year lows, pointing to an improving labor market.

 

USD/CAD for Tuesday, November 4, 2014

USD/CAD November 4 at 16:05 GMT

USD/CAD 1.1404 H: 1.1427 L: 1.1340

 

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.1004 1.1124 1.1278 1.1414 1.1493 1.1669

 

  • USD/CAD posted gains late in the Asian session and continued to move upwards in European trade. The pair is stable in the North American session.
  • 1.1278 has strengthened in support as the pair trades at higher levels.
  • On the upside, 1.1414 was tested earlier and remains under pressure 1.1493 is next.
  • Current range: 1.1278 to 1.1414

Further levels in both directions:

  • Below: 1.1278, 1.1124, 1.1004, 1.0961 and 1.0865
  • Above: 1.1414, 1.1493, 1.1669 and 1.1723

 

OANDA’s Open Positions Ratio

USD/CAD ratio is pointing to gains in short positions on Tuesday. With USD/CAD continuing to post strong gains, additional long positions have been  covered, resulting in a greater percentage of open short positions. The ratio has a majority of short positions, indicting trader bias towards the Canadian dollar reversing direction and moving to higher ground.

 

USD/CAD Fundamentals

  • 13:30 Canadian Trade Balance. Estimate CAD -0.7B. Actual CAD +0.7B.
  • 13:30 US Trade Balance. Estimate -40.0B. Actual -43.0B.
  • 15:00 US Factory Orders. Estimate -0.4%. Actual -0.6%.
  • 15:00 US IBD/TIPP Economic Optimism. Estimate 46.6 points. Actual 46.4 points.
  • 15:30 BoC Governor Stephen Poloz Speaks.
  • All Day – US Congressional Elections.

* Key releases are in highlighted bold.

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.